STAMP DUTY RATES IN ANDHRA PRADESH IN RESPECT OF AGREEMENT OF SALE CUM POWER OF ATTORNEY AND DEVELOPMENT AGREEMENT CUM POWER OF ATTORNEY PAYABLE UNDER ARTICLE 6(B) OF SCHEDULE I-A

Stamp duty is the amount payable to state government on the instruments of conveyance, sale, gifts, exchange, partition deeds, power of attorney to sell immovable property, settlement deeds, and transfer of lease by way of assignment. Payment of stamp duty gives legal effect to the document and makes it admissible in the Court of Law. Central government collects stamp duty for instruments of commercial instruments like share transfers, letters of credit, bill of exchange etc. in order to ensure uniformity in payment of stamp duty in respect of such instruments all over the country.

The provisions for payment of stamp duty and registration charges have been provided for the sole purpose of generating revenues for the government. But the high rates of stamp duty and registration result in non-registration of property transactions and transfers made through power of attorney, encouraging non-conformity with laws and loss of revenue to the government.

High rate of stamp duty prevents prospective purchasers from registering the property transfer. They tend to evade such payment by avoiding registration. If the property transaction is not registered, it cannot be called a transfer and such income from such transfer is not noticed for tax under capital gains.

The stamp duty rates in Andhra Pradesh were very high, due to which certain property transfer transactions were not registered for the purpose of avoiding payment of stamp duty on such rates. The result was obviously the high loss of revenue to the government. Also, it was pointed out that the lower rate of stamp duty would reduce use of black money for property transactions, facilitate bona fide transactions and increase potential for larger revenue collection.Section 9(1) (a) of the Indian Stamp Act gives power to the government to reduce, remit or compound duties. Article 6(B) of Schedule I-A of Indian Stamp Act, 1899, as amended by the Andhra Pradesh Amendment Act 21 of 1995 provides for payment of Stamp Duty for Agreement or Memorandum of an Agreement not otherwise provided for in relation to construction of a house or building including a multi-unit house or building or unit of apartment/flat/portion of a multi-storied building or for development/sale of any other immovable property.

Therefore realizing this trend of evasion of payment of revenue by the prospective buyers of property and to encourage payment of taxes, in exercise of the powers conferred by clause (a) of sub-section (1) of section 9 of the Indian Stamp Act, 1899, the Governor of Andhra Pradesh by way of notification dated 01-08-2005, reduced the Stamp Duty payable under Article 6(B) of Schedule I-A of the Indian Stamp Act, 1899 in respect of the documents relating to Agreements or Memoranda of Agreements of sale/construction/development of immovable properties to 1% on the sale consideration or estimated cost of construction/development, as declared by the parties to the document, subject to Rs. 20,000/- on the condition that the Stamp Duty so paid shall not be adjustable at the time of registration of consequent sale deeds in pursuance of such agreements duly registered under the Registration Act, 1908.

In respect of the documents relating to Agreements or Memoranda of Agreements of sale or construction or development of immovable properties combined with General Power of Attorney clause Stamp Duty is reduced to 1% on the sale consideration or estimated cost of construction/development, as declared by the parties in the document, subject to a maximum of Rs. 50,000/- on the condition that the stamp duty so paid shall not be adjustable at the time of registration of consequent sale deeds in pursuance of such Agreements-cum-General Power of Attorney registered under the Registration Act, 1908.

The reduction of stamp duty has thereby promoted registration of property and in the long run will encourage investment and reduce cash element in property transactions. This will also provide for increase in revenue collections of the government as well.

The notifications issued by the Government for reduction of Stamp Duty under Article 6(B) of Schedule I-A are given below.

NOTIFICATION – I

In exercise of the powers conferred by clause (a) of sub-section (1) of Section 9 of the Indian Stamp Act, 1899 (Central Act II of 1899), the Governor of Andhra Pradesh hereby reduces the Stamp Duty payable under Article 6(B) of Schedule I-A of the Indian Stamp Act, 1899 in respect of documents relating to Agreements or Memoranda of Agreements of sale/construction/development of immovable properties to 1% on the sale consideration or estimated cost of construction/development, as declared by parties in the document, subject to a maximum of Rs. 20,000/- on the condition that Stamp Duty so paid shall not be adjustable at the time of registration of consequent sale deeds in pursuance of such Agreements duly registered under the Registration Act, 1908.

The above notification shall come into force with effect from 01-08-2005.

NOTIFICATION – II

In exercise of the powers conferred by clause (a) of sub-section (1) of Section 9 of the Indian Stamp Act, 1899 (Central Act II of 1899), the Governor of Andhra Pradesh hereby reduces the Stamp Duty payable under Article 6(B) OF Schedule I-A of the Indian Stamp Act, 1899 in respect of documents relating to Agreements or Memoranda of Agreements of sale or construction/development of immovable properties combined with General Power of Attorney clause to 1% on the sale consideration or estimated cost of construction/development, as declared by the parties in the document, subject to a maximum of Rs. 50,000/- on the condition that the stamp duty so paid shall not be adjustable at the time of registration of consequent sale deeds in pursuance of such Agreement-cum-General Power of Attorney registered under the Registration Act, 1908.

The above notification shall come into force with effect from 01-08-2005.